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EARLY TIP: How can investors compete when the Street knows before them? Photo: Getty Images

A university or college should never engage in cheating, but that is exactly what the University of Michigan is doing to individual investors in the markets.

Last week the university admitted that it releases market-moving consumer-sentiment data to business partner Thomson Reuters’ high-paying clients five minutes before everyone else gets the information.

And the data are given to higher-paying high-frequency trading clients two seconds earlier than that.

It’s all quite legal, but it certainly isn’t fair. And if it isn’t fair, then it isn’t a free market — and that’s the point.

Cheating isn’t rewarded in school, and schools — which are enterprises chartered to do the public good — shouldn’t be enabling cheating in the markets.

No one should: not the exchanges, market makers, research firms or any other players. Just because the University of Michigan can develop powerful economic-research surveys, it does not gain the right to sell its market-moving research to some high-frequency traders in advance for a hefty fee plus “revenue enhancements.”

Presumably Michigan Democrat Sen. Carl Levin, who zealously has raked New York’s top bankers, Jamie Dimon and Lloyd Blankfein, over the coals more than a few times, is now prepared to look in his own backyard?

Which raises another point: Why haven’t the exchanges and high-frequency front-runners been dragged in front of the cameras?

Is it coincidence that high-frequency firms (which are typically small broker-dealer operations) generate the highest amount of trading fees for the exchanges and Wall Street?

These shops now rule the Street and, apparently, Washington. With their ultrawide bandwidth servers and API code-writing elves, they know what we will know two seconds before we do!

And that’s all they need to act, sending out orders at hyperspeeds and sometimes reaping tens of millions of dollars in a day.

But there’s another part to this problem: market structure.

Over the past 10 years, our markets have become more and more of a rigged, pay-to-play Pandora’s box. We do not have the fairer, better markets that Washington and the exchanges keep bragging about. Sure, they’re the best in the world. But fairer than they were 10 years ago? No way.

Unfortunately, it starts with the exchanges themselves — the direct overseers of billions of dollars in trades per minute.

For the right (very large) price, you can buy a spot and place your server at the exchange, which entitles and enables you to receive info and place trades ahead of others.

Again, we’re talking about milliseconds, but that’s all speed traders need to execute thousands of bids and asks.

For a large fee the Chicago Mercantile Exchange, Nasdaq and the New York Stock Exchange — which are actually regulatory entities as well as public for-profit companies — permit those with the cash to trade ahead of those with the six-pack. The small investor is getting shafted by the exchanges.

Since the University of Michigan is unlikely to step up and do the right thing, maybe New York can once again lead.

It’s time for the exchanges to voluntarily disseminate all information at the exact same time and disallow server farms on exchange property if they can’t guarantee equal data-delivery times.

A school spokesperson said on Thursday, “Sponsors have always been provided results of surveys before [the results are] released to the public.”

Sounds like a defense for a kid who gets the answers before the final exam.